CACI 2027 회계연도 1분기 실적 발표 콘퍼런스 콜: 마진 확대로 가이던스 상향

핵심 요약

• 2027 회계연도 1분기 매출은 자체(organic) 성장률 2.1%를 포함해 전년 동기 대비 8.2% 증가한 25억 달러를 기록했다.
• EBITDA 마진은 우수한 프로그램 수행력과 고마진 기술 사업 비중 확대에 힘입어 전년 동기 대비 160bp 확장된 13.3%를 기록했다.
• 조정 희석 주당순이익(EPS)은 11.8% 증가한 7.66달러를 기록했으며, 잉여현금흐름(FCF)은 총 1억 3,300만 달러를 나타냈다.
• CACI의 수주액은 48억 달러로 북투빌(book-to-bill) 비율 2.0배를 기록했다. 총 수주잔고는 340억 달러에 달했으며, 예산이 확보된(funded) 수주잔고는 전년 동기 대비 15% 증가했다.
• 경영진은 2027 회계연도 매출 가이던스를 5,000만 달러 상향한 107억~109억 달러로 제시하고, 조정 희석 EPS 가이던스도 33.18~34.08달러로 올려 잡았다.
• 매출 가시성이 향상되었다. CACI는 이제 2027 회계연도 매출의 94%가 기존 프로그램에서 발생할 것으로 예상하며, 이는 전 분기의 83%에서 상승한 수치다.

주요 재무 데이터

사업 및 영업 실적

CACI는 마진 확장의 원인으로 사업 수행력과 차별화된 기술의 기여도 확대를 꼽았다. 경영진은 기술 우선 모델이 신규 수주와 기존 계약의 성장 모두를 지원하고 있다고 밝혔다.

주요 수주 건으로는 정보 및 정보전 임무를 지원하는 아폴로(Apollo)와 미 육군 특수작전사령부 대상 5년 만기 후속 계약인 소프트 탑스 2(Soft Tops 2)가 포함됐다. 경영진은 아폴로의 매출 본격화가 3회계분기에 한층 강화될 것으로 기대하고 있다.

전자전 및 대드론(counter-UAS) 역량 전반에서 견조한 수요가 지속되었다. CACI는 초기 예산이 반영된 과업지시서가 포함된 5억 달러 규모의 도메스틱 쉴드(Domestic Shield) 수주와 함께 미국 고객 및 유럽·태평양 동맹국들로부터의 빔 맨팩터블(Beam Manpackable) 대응 시스템 수요 증가를 강조했다.

우주 분야에서 CACI는 반토르(Vantor)의 위성군에 탑재할 첨단 광학 영상 수송화물 공급업체로 선정되었다. 회사는 또한 올해 말 SDA 트랜치 1(Tranche 1) 광통신 장비 인도를 완료하고 트랜치 2 작업에 착수할 것으로 예상하고 있다. 아울러 미 우주군의 엔터프라이즈 기반 단말기 프로그램 3단계(Phase 3)에 진출했다.

CACI는 수요를 뒷받침하기 위해 생산 능력을 확대하고 있다. 뉴욕주 로체스터에 6만 1,000제곱피트 규모의 방산 전자 전문 제조 센터를 개설했으며, 우주 및 통합 시스템을 위한 추가 시설을 계획하고 있다.

경영진 가이던스

경영진은 매출 가이던스를 5,000만 달러, 조정 순이익 가이던스를 500만 달러 상향 조정했다. EBITDA 마진과 잉여현금흐름 전망치는 기존 수준으로 재확인했다.

CACI는 하반기 자체 성장률과 EBITDA 마진이 상반기보다 더 높을 것으로 계속 전망하고 있다. 다만 경영진은 1분기의 견조한 실적 이후 마진 상승세가 보다 완만해질 것으로 내다봤다.

회사는 2027 회계연도 매출의 94%가 기존 프로그램, 3%가 재입찰 계약, 3%가 신규 사업에서 창출될 것으로 기대한다. 또한 현재 47억 달러 규모의 입찰 심사가 진행 중이며, 향후 2개 분기 동안 추가로 147억 달러 규모를 입찰할 예정이다.

CACI는 2027년 1월 1일부터 달력 기준 회계연도로 전환한다. 경영진은 내년 2월 12월 분기 실적 발표 때 신규 회계연도 가이던스를 제공할 예정이며, 2027년 초 인베스터 데이에서 새로운 3개년 재무 목표를 발표할 계획이다.

리스크 및 관전 포인트

• 12월 11일까지 임시지출결의안(continuing resolution)이 발효 중이다. 경영진은 CACI가 수주잔고와 장기 계약 사업을 바탕으로 중대한 영업상 영향 없이 과거에도 이 같은 예산 상황을 헤쳐왔다고 밝혔다.
• 연방 정부 수주 활동은 개선되었으나 일부 분야에서는 의사결정이 여전히 더딘 편이다.
• 메모리 반도체 및 희토류 원자재의 인플레이션과 조달 기간 연장이 발생하고 있다. 경영진은 이러한 제약 사항이 가이던스에 반영되어 있으며, 조달 기간이 긴 부품의 경우 더 조기에 현금을 집행해야 할 수 있다고 밝혔다.
• 인수 후 첫 12개월 이내에 반영될 예정이었던 일부 ARKA 우주 프로그램 매출이 그 이후로 이월되었다. 경영진은 이 변화를 단순 시점 조정으로 규정하며 ARKA에 대한 연간 전망치를 그대로 유지했다.
• CACI의 하반기 자체 성장률 전망은 최근 수주한 프로그램들이 계획된 매출 증대 단계를 순조롭게 진행하는지 여부에 일부 좌우된다.

애널리스트 Q&A 주요 내용

자체 성장 가시성: 경영진은 예산 확보 수주잔고의 15% 성장, 이의제기가 없었던 최근의 대형 수주, 연간 예상 매출의 94%가 이미 기존 프로그램과 연계되어 있다는 점을 언급했다. CACI는 지난해 말이나 올해 초에 확보한 여러 수주 건이 2분기 이후 본격화될 것으로 내다봤다.

마진 및 투자: 경영진은 성장을 유지하는 동시에 지속적이고 완만한 마진 개선 기회가 있다고 보고 있다. CACI는 특정 단일 분기의 최적화보다는 잉여현금흐름 창출을 위해 포트폴리오를 관리하고 있으며, 약 1,900개의 활성 프로그램 전반에 걸쳐 투자 균형을 유지하고 있다고 강조했다.

ARKA 매출 시점: CACI는 전체 회사 매출 가이던스의 5,000만 달러 상향 조정이 인수 1주년 이후 ARKA 매출이 인수 매출에서 자체 매출로 전환되는 과정에서 나타난 5,000만 달러의 시점 이동과 별개라고 설명했다.

고정 가격 계약: 고정 가격 계약의 비중이 매출의 27%에서 33%로 증가했다. 경영진은 6%포인트의 비중 증가 중 절반가량은 ARKA에서 발생했으며, 나머지는 고정 가격 사업 활동의 자체 성장을 반영한 것이라고 밝혔다. CACI는 기술적 리스크가 사전에 파악된 경우에 한해 선별적으로 이러한 사업을 수주한다고 전했다.

장기 성장 분야: 경영진은 전자전 및 우주 사업이 향후 3~5년간 주요 매출 및 이익 기여 분야가 될 것으로 기대하면서도, 투자 결정은 여전히 잉여현금흐름 확대에 중점을 두고 있음을 강조했다.

자본 집행: CACI는 ARKA 인수 이후 부채비율을 계속 낮춰가고 있다. 경영진은 순규모 확대보다는 역량 공백을 메우는 데 집중하고 있으나, 부채 축소 진전으로 추가 투자 및 기회주의적 인수를 위한 유연성이 회복되고 있다고 말했다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the CACI International First Quarter Fiscal Year 2027 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to George Price, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

George Price

Thanks, Morgan, and good morning, everyone. I'm George Price, Senior Vice President of Investor Relations for CACI International. Thank you for joining us this morning. We are providing presentation slides, so let's move to Slide 2.

There will be statements in this call that do not address historical fact and as such constitute forward-looking statements under current law. These statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from anticipated. Those factors are listed at the bottom of last night's press release and are described in the company's SEC filings. Our safe harbor statement is included on this exhibit and should be incorporated as part of transcript of this call.

I would also like to point out that our presentation will include discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

Let's turn to Slide 3, please. To open our discussion this morning is John Mengucci, President and Chief Executive Officer of CACI International. John?

John Mengucci

Thanks, George, and good morning, everyone. Thank you for joining us to discuss our first quarter fiscal year '27 results. With me this morning is Jeff MacLauchlan, our Chief Financial Officer. Slide 4, please. Before turning to our results, I want to remind you that CACI is a technology-first national security company, executing a clear and consistent strategy. The key elements of that strategy are: first, focused on enduring national security priorities with narrow deep funding streams; second, utilize our deep mission knowledge in the markets we serve to truly understand what our customers need; third, invest ahead of customer need informed by that deep mission knowledge; fourth, deliver software-defined technology to address critical needs for the speed, agility and efficiency our customers demand; and finally, deploy capital in a flexible and opportunistic manner to create value for our customers and our shareholders. This strategy is to drive new force behind our strong and consistent results.

Slide 5, please. We had an excellent start to fiscal year '27. First quarter revenue grew 8%, EBITDA margin reached 13.3%, adjusted diluted EPS increased 12%, and we generated $133 million in free cash flow. We also won $4.8 billion in awards, producing a 2x book-to-bill for the quarter. We have a large and growing backlog and our funded backlog grew double digit year-over-year for the seventh time in the last 8 quarters.

Our margin performance stands out. It reflects superior execution and a higher mix of differentiated technology we delivered this quarter. We're raising our revenue and earnings guidance for the year, and Jeff will share additional details shortly. Our results, awards, backlog and pipeline give us a strong foundation for the fiscal year and support our increased guidance.

Slide 6, please. Let me discuss some more details on highlights from the quarter and the demand that we're seeing that are driving our results and position us for continued success. I'll start with 2 fantastic awards for technology-enabled operational support that exemplify our enduring commitment to national security. First, our Apollo award, where CACI will enable SIMCOM to carry out critical intelligence and information warfare missions. Our success in winning this new work for CACI stems from our deep mission knowledge, our exceptional business development and our superior ability to utilize and combat AI in the information domain.

The second award is Soft Tops 2, a 5-year follow-on contracts supporting the Army's Special Operations Command. It reflects the trust we've built through years of work with this customer and extends our role helping special operators plan for and respond to evolving threats using our technology-first approach.

Our electronic warfare portfolio continues to see strong demand. That is certainly true in the counter-UAS market, a significant and growing opportunity for CACI. Beyond protecting our war fighters, the growing threat to military facilities and critical infrastructure is driving demand for precision nonkinetic counter-UAS capabilities like Sky Valor. Sky Valor leverages nearly 2 decades of proven counter UAS deployments, industry-leading cellular detect and defeat capabilities enables detection up to 75 kilometers, so operators have more time to make critical decisions. Our prospective counter-UAS customer base is expanding across the U.S. government and internationally. A great example is our $500 million Domestic Shield award from GINA 401, which also included an initial funded task order.

We're also seeing increased demand for our Beam Manpackable counter systems from U.S. customers and allies across Europe and the Pacific theater. Beam is the most technically capable system of its kind on the market with over a decade of proven performance and important discriminator for prospective customers. And in the critical space domain, we're capitalizing on increasing demand as the leading merchant supplier of optical imaging and optical communications payloads. CACI was recently selected by Vantor, a commercial provider of satellite-based intelligence, to supply advanced optical imaging payloads for their pulse satellite fleet. That work is an example of taking ARCA's exquisite sensor capabilities developed for national security missions and applying them to a more proliferated commercial market, which is exactly what the U.S. national security strategy calls for.

ARKA has a number of other sensitive opportunities in the national security space domain that are moving forward and are expected to contribute financially in fiscal year '27.

We're also making progress in optical communications. We expect to complete SDA Tranche 1 deliveries later this calendar year and begin work on Tranche 2. CACI was also 1 of 3 companies selected to advance to Phase 3 of the SpaceForce's enterprise-based terminal program where we are developing the next-generation optical communication terminal to support critical multi-orbit initiatives like the space data network. Consistent with our merchant supplier strategy, multiple primes bidding on the SDN has selected our EST technology for their solution. We also continue to win and execute other classified optical communications programs. And our successful contribution to the RMS 2 mission has helped demonstrate the capability of our technology for future human space flight.

Finally, demand remains healthy for modernization of mission networks and digital applications. Many critical customer priorities, including AI adoption, border security and financial accountability are dependent on modern secure integrated networks and applications for success. CACI is a leader in modernization because we do it differently, differentiating through speed of delivery, use of outcome-based models and demonstrated success deploying AI-based software. Programs such as [indiscernible], ITAS and NASA NCAPs are real-world examples of where we're applying AI and agile delivery methods to drive customer modernization faster and more efficiently.

Leveraging AI translates into reduced cost for customers and better margins for us, and we consistently see customers reinvest in cost savings and additional scope to CACI.

Across all areas of our business, our technology-first approach is directly contributing to our financial performance by driving on-contract growth and new business wins from customers who are committed to transforming at the speed of mission.

Slide 7, please. In order to meet strong demand we're seeing for our software-defined technology, we are actively investing to scale our production capacity. Our first step was to open our manufacturing center of excellence for defense electronics in Rochester, New York. The additional 61,000 square foot facility significantly increases our manufacturing space and expands our capacity to develop, test, assemble and deliver defense electronics, such as TLS Manpack, Beam and others.

We plan to open additional manufacturing centers of excellence for space and for integrated systems, and we'll share more about these initiatives in the coming months. These investments will enable us to deliver advanced technology faster, at greater scale and more efficiently, supporting continued revenue growth and additional margin expansion.

Slide 8, please. Turning to the macro environment, budgets and funding remain healthy and our key areas of focus. With 90% of our revenue coming from national security customers, the priorities we focus on are well funded and continue to exhibit strong demand signals because they are needs that must be addressed.

And continuing resolution or CR, is currently in place until December 11. Regardless of how this dynamic plays out, it's an environment we've navigated successfully for many years. As we demonstrated year in and year out, SEARS did not have a material impact on our business given our large backlog, longer duration awards and the critical capabilities that our customers depend on us to deliver.

Federal awards perspective and our strong book-to-bill shows some improvement in award activity though the pace of decision-making is not fully normalized and is still sluggish in some areas. As our customers continue to involve their relationships with industry through nontraditional procurement methods, our key differentiators of investing ahead of customer need, software-defined capabilities and outcome-based pricing are all resonating extremely well because they drive increased speed, efficiency and lethality.

Slide 9, please. Before turning the call over to Jeff, I wanted to discuss a few other updates. First, we announced we will move to a calendar fiscal year beginning January 1, 2027. We believe this reporting cycle will enhance comparability for investors and better align our business with the government's fiscal year. We plan to provide guidance for our new fiscal year when we report December quarter results in February. Second, we plan to host an Investor Day in early 2027 at our Melbourne, Florida, facilities. At this event, we intend to provide additional information about the new fiscal year, other contemplated reporting changes, discuss our strategy and capabilities, provide an opportunity to meet with the CACI management team, including additional executive leadership we recently announced, and provide new 3-year financial targets. We look forward to sharing more information with you in the near future.

With that, I'll turn the call over to Jeff.

Jeffrey MacLauchlan

Thank you, John. Good morning, everyone. Please turn to Slide 10. We're pleased with our first quarter performance in which we delivered revenue growth in line with our expectations. Revenue was $2.5 billion for the first quarter, up 8.2% year-over-year with organic growth of 2.1%, in line with our previously communicated low single-digit organic growth.

EBITDA margin in the quarter was an impressive 13.3%, 160 basis points higher than the prior year's first quarter, driven by strong program execution and a more favorable mix of higher-margin work.

First quarter adjusted diluted earnings per share of $7.66 were 11.8% higher than a year ago, driven by this excellent operational performance.

Finally, free cash flow of $133 million for the quarter reflects higher cash outflows typical in the first quarter of the year.

Slide 11, please. Turning our attention to the balance sheet and capital structure, we continue to make progress reducing our leverage following the ARKA acquisition. Pro forma leverage at the end of the first quarter was 3.5x, and we now expect to return to leverage in the low 3s in the March quarter of 2027, 2 quarters earlier than we had initially anticipated. As we have discussed, this is consistent with our track record of successfully deleveraging after major acquisitions.

Driven by our profitability and strong free cash flow generation, our moderating leverage is quickly putting us back in a posture of having increased optionality for additional flexible and opportunistic capital deployment.

Slide 12, please. Turning to our outlook for fiscal '27. We are raising guidance for revenue, adjusted net income and adjusted EPS and reaffirming guidance for other metrics. I note that while we made a particularly strong initial guide to begin the year, a strong awards quarter and operational developments have retired additional risk relative to our expected range of outcomes. We are raising fiscal '27 revenue guidance $50 million to between $10.7 billion and $10.9 billion. Our fiscal '27 revenue now assumes approximately $450 million of acquired revenue.

While ARKA continues to perform in line with our expectations for the full fiscal year, some space program activities are now expected to contribute to revenue beyond the first 12 months after closing the acquisition.

We are reaffirming fiscal '27 guidance for EBITDA margin in the high 12% range. This and higher revenue has a consequent impact to increase adjusted net income by $5 million to between $740 million and $760 million, which translates into increased adjusted diluted earnings per share guidance between $33.18 and $34.08, and we are reaffirming guidance for free cash flow of at least $900 million.

Finally, to assist with your modeling, I'd remind you of our prior comments that we expect stronger organic growth and EBITDA margin in the second half of the fiscal year versus the first half. Though I note the second half margin ramp is now more gradual given our strong Q1 performance. I would also note our view that second quarter consensus estimates for organic growth and EBITDA margin are reasonable.

Slide 13, please. Turning to our forward indicators. We now expect 94% of our revenue to come from existing programs, with 3% coming from recompetes and 3% from new business. This significant increase in existing business content, which was 83% just last quarter, reflects our successful business development and operational performance and provides increased confidence in our updated guidance, as I mentioned earlier. In fact, this is the highest level of existing business at this point in the year in the last 7 years.

First quarter awards were $4.8 billion, representing a healthy mix of new work and strong recompete performance. The weighted average duration of these awards was just under 4.5 years, which reflects the higher mix of sole-source extensions we've seen recently as well as normal variance in award duration. Our long award duration continues to provide good visibility into the strength and cash generation capacity of our business.

Total backlog was $34 billion, and funded backlog increased by 15% year-over-year. This represents the seventh time in the last 8 quarters we have delivered double-digit year-over-year growth in funded backlog, underscoring the critical national security priorities we address and the support of our customers.

We continue to see a healthy pipeline of new opportunities with $4.7 billion of bids under evaluation, about 85% of these being for new business. Bids under evaluation also reflects significant level of awards in the quarter. We expect to submit another $14.7 billion in bids over the next 2 quarters with more than 60% coming from new business.

In summary, our first quarter was a great start to the year. Our consistent performance, substantial backlog and strong market position give us confidence in our increased guidance and our ability to drive growth in free cash flow per share and additional shareholder value. And with that, I'll turn the call back over to John.

John Mengucci

Thank you, Jeff. Let's go to Slide 14, please. In conclusion, we delivered strong first quarter results and raised our revenue and earnings guidance for the year. Our large and growing backlog, strong customer demand signals and ability to deliver and give us confidence in our outlook. Regardless of CRs, elections, government shutdowns or other dynamics, we have delivered consistent results. It's worth repeating, CACI has a clear, consistent strategy and our financial results once again demonstrate that our strategy is working. You've heard us say consistently that we view free cash flow per share as the ultimate value creation metric. CACI has a long and consistent track record of generating strong cash flow. This level of cash generation enables us to continue investing ahead of a customer need, racking capital in a flexible and opportunistic manner, both of which then enable us to generate additional cash flow over time. You've seen us do exactly that as we deploy new technology capabilities and made strategic acquisitions like Azure Summit and ARKA. These actions allow us to turn the strong demand we see into results for our customers and lasting value for our shareholders. As is always the case, our success is driven by our 27,000 employees who are ever vigilant and expanding elements of national security. To everyone on the CACI team, I am proud of what you do every day for our company and for our nation. And to our shareholders, I thank you for your continued support of CACI. With that, Morgan, let's open the call for questions.

Operator

[Operator Instructions] Your first question comes from Sheila Kahyaoglu with Jefferies.

질의응답

Sheila Kahyaoglu

John, maybe just on your closing remarks, you've consistently been in the right place at the right time in terms of future funding needs. I guess what's the secret? And how do you think about where the growth goes from here? I know you'll have a March Analyst Day first half Analyst Day where you will talk about that, but how have you been able to outperform your peers here?

John Mengucci

Yes, Sheila, thanks, and I really appreciate the question. Look, I think simply, first off, it's because we're a very different company than others in our current sector, we've been doing our best to outperform others in the larger spaces well. It's really down to something that we've shared over probably the last decade is just having a clear strategy intentional leadership and disciplined execution over many, many years. We've invested ahead of need and have decades of deep mission knowledge, and we're in areas of enduring need. We like to talk about neuro funding streams. But the way we look at it internally, these are all things that are not the first to 10th or the 100th thing that customers are going to want to turn off. We take a lot of purposeful discriminating actions.

I can tell you internally that we measure the time between vision and our strategy and action in weeks. And we've been very honest upfront, very transparent and very thoughtful around capital deployment and truly build shareholder value. So a lot of transparency, a lot of results that lead to a lot of credit credibility, frankly.

The other thing that I would mention is something that we don't talk a lot about, but it's very important, is that we truly did recreate this company 10, 12 years back, to be a FAR Part 15 and a far FAR Part 12 truly commercial company. And we didn't get lucky, we actually did study where the market was going to go and where the customer sets were -- how the customers were going to be changing how they buy. And I think it's true it's today that $0.5 billion of our bookings last year were done through OTAs and CSOs. That's something that we called very, very right many, many years back. And you don't just turn anything on overnight.

So strategy is place where we come from, have an outstanding leadership team that actually drives the strategy forward and a whole slew of PMs and finance leads and the like that are making sure that we, frankly, deliver excellence because customers buy from people that they trust and customers buy from people who always deliver. And I think our results show that.

Sheila Kahyaoglu

No, that's great. Maybe just a follow-up on that. As we look at the organic growth, for Q1, up 2%. Q2 up 7% implies second half grow low double digits in the face of pretty tough comps. Can you give us some color on what's driving your organic growth visibility and your competition side there?

John Mengucci

Yes. I mean it really points ourselves towards how do we get through back half is risk model, and we've been getting that question a lot. And I think we never get our way not only through the questions, but through the performance last year. But look, risk is something that we work through all the time. It's just the nature of our business. When our revenue starts from a new win, it's really based on timing of the award, the program start date, funding type of contract, et cetera. This year, it's true we have a number of late last year and early this year awards to hit their first notch in their growth stride after the second quarter. And I'm very much aware that that's the same as a time that the current CR ends.

So what gives us confidence? We've we've taken a long look at the growth of our backlog. I think you should all look at the level of funded backlog growth. The fact that we've got a lot of non-protested recent large award, we have a customer base that, frankly, really needs to move forward quickly, and that just happens to align with our current Q3, I guess, another quarter will be our newest Q1. But -- and so we won those jobs, and that's sort of how the revenue profiles stack on top of each other. We've always talked about long duration awards, right? So what else gives us a lot of confidence in is the first or second ramp for the third and fourth quarter ramp is that we expect a number of awards with longer durations over a long period of time. So we see the awards. Our front-end backlog is there. Our technology deliveries will also be there. And I think everything is greatly aligned, on top of that reduces the risk of a high second quarter profiles, CRs, shutdowns, budget [indiscernible], midterms or anything else you can throw in there. So Jeff, anything you want to add?

Jeffrey MacLauchlan

Yes. I think there are 2 things, Sheila, that are a little bit different about our portfolio from some others. One is that we have a great number of small programs, smaller programs. So we're managing kind of 1,900 or so active pieces of the portfolio and managing that for the year. The other thing that's different, I think, about our portfolio is that we have a great deal of margin volatility -- not volatility, variability.

And because of that, we have programs with single-digit EBIT margins, and we have programs with EBIT margins in the low 30s. And so managing that mix, and we do manage for the year, which I'm sure you're tired of hearing us say, but managing across that mix is a constant challenge as you would imagine. So very different management experience in my experience from working in an enterprise that has 15 or 20 large programs.

John Mengucci

The last thing I'm going to add is the metrics that we've shared. The fact that we're at the end of the first quarter, we're looking at 94% of our revenue already in-house and only 3% recompete left, that's an outstanding position for us to be and even better than where we were last year, and you all know how last year turned out, record revenue, record earnings, record free cash flow.

Operator

Your next question comes from Gavin Parsons with UBS Financial.

Gavin Parsons

I mean clearly, seeing the investments you've made in technology already reflected in the margins, but I want to ask how you think about payback period and obviously, without asking about any specific programs, but maybe if you could use like Sky Valor as a frame of reference.

John Mengucci

Yes, sure. Look, we've invested in a lot of software-based tech over the last decade. And I truly believe that our shareholders have been greatly rewarded and they will continue to be rewarded for the results. And we can talk about Pines, we can talk about ARKA, talk about space, talk about CTs, there's a lot of examples here, but at the end of the day, strategy is a place where we come from. So these are not high risk invest ahead of customer need operations. I mean we run this company as a full throated company. And it's why we always talk about we're not going to invest for the next quarter. We're going to invest for the next decade. So as hard as some of the stuff is that we do. We don't -- we've never come back to our investors and said, because we had to invest more, these financials are not going to look the way they look, okay? We are a consistent free cash flow compounder and a consistent company that's out there buying the right capabilities to go ahead and continue to drive this company forward.

So whether it's counter-UAS where we've been investing for well over a couple of decades, we've invested and we sort of moved from a fixed-site solution to a mobile solution. Things like beam are not in high demand because we got lucky. They're in high demand because we're good and it's good. So whether it's Sky Valor giving commander's larger range, we understand how to do all of that because we have 1,400 people forwardly deployed and a lot of people embedded and that kind of operational support gives us just absolute better data than everybody else gets back to Sheila's earlier question, and allows us to invest in the right manner in the right levels in a manner that we're not coming to our shareholders after the quarter is done, saying I wish we hadn't invested in all of that because now we can't make revenue or we can't make earnings. We're doing it all.

Gavin Parsons

And then maybe just a quick clarifier on ARKA to make sure I heard no change to the expected ARKA revenue for the full fiscal year, it's just timing?

John Mengucci

Yes. Let me talk a little bit about ARKA. I think it's been probably at least here to fore. It's probably one of the greatest acquisitions that we've done because it sets us up for so many things. It's a great business is performing as expected. They're a leading provider of sensing and sense-making capabilities. I'd like to say they've been doing large aperture solutions since [indiscernible] was a [indiscernible]. They are 1.5 companies that do what they do. So it's a very strong barrier to entry. And now as you heard from the [indiscernible] award, we're now moving to smaller form factors without sacrificing purity. And we're also building those at higher commodity.

So specific to your question, yes, the $50 million moves a quarter to the right. We didn't take the full year or the guidance down. We actually raised full year and shifted theirs. So at the end of the day, this $50 million is different than the $50 million raise guide. This is really about moving that from next 12 months based on a March closure date to the current first fiscal year. So all of this attention is really moving revenue to after March 9, but before June 30. So we don't see -- it's not about missed numbers, it's just timing, like the majority of the rest of our business. Jeff, anything else you want to add?

Jeffrey MacLauchlan

Yes. No, I think you covered it, but I would say maybe slightly different way that might land with some people differently. The $250 million numbers you're hearing are unrelated, completely independent. There's a $50 million growth in the total revenue, and there is $50 million of movement in the ARKA revenue from inorganic to organic based on being after the anniversary date. So they're different 50s.

Operator

Your next question comes from John Godyn with Citi.

John Godyn

Hopefully unpack margins a little bit. If I rewind to maybe a year or so ago, there was sort of a conversation about the growth versus margin trade-off, and how margins might be topping out, the margin performance and execution has been great. We also have ARKA in there. So it's kind of hard to unpack that perfectly. But maybe you could just talk about growth versus margins in the core business versus ARKA? And are we at a point where we're finding a new sort of lever to get margins higher?

Jeffrey MacLauchlan

Look, we have said a couple of things pretty consistently, and I'm going to come back and answer your question more directly. But we've said a couple of things pretty consistently. One is that we manage the business for free cash flow. And so we're continually making decisions balancing investment and growth. The other thing that may be clouding this up a little bit is the condition I mentioned earlier, which is the margin variability. And what we see as we manage our way through this, particularly in the internal quarters of the year as we manage across the 1,900 programs that I mentioned earlier. So those conditions are both what they are and no one should be surprised. We've talked about these multiple forums for a long time. To get to your more specific question, I think, we do continue to see opportunities for continued modest margin improvement. And that's taking into account the 2 conditions I just mentioned, but it is an extremely opportunity-rich environment, and we see plenty of opportunities to invest [indiscernible] opportunities for growth, which really put us in the posture I think in some ways of being able to kind of have our cake and eat it too.

So I think we do see continued modest margin improvement even while we're maintaining the growth vector.

John Godyn

And if I could just ask kind of a related follow-up on margins this year. In the prepared remarks, you mentioned that margins in the back half would step up, but perhaps less so now that you had good early year margin performance. I just wanted to revisit that. It sounds like the margin improvement engine is firing on all cylinders. As you said, you have kind of a target rich backdrop. Is there some conservatism in that view? Could we maybe see even a higher step-up in the back half?

Jeffrey MacLauchlan

Well, that's a loaded question. Look, we continue to do what I've been describing that we do. And if it shakes out that way, it's impossible for me at this point to necessarily predict an investment decision that we might make or not make next April. But we've tried to be pretty open with you sharing the levers and the knobs that we're managing and how we solve for them. And I think I probably should leave it at that.

Operator

Your next question comes from Scott Mikus with Melius Research.

Matthew Marottolo

This is Matt Marottolo on for Scott. We've heard from aerospace companies that memory semiconductors rare earths are seeing very high levels of inflation in elongated lead times. How are you managing around those constraints? Are there any other pinch points you would call out in the supply chain?

John Mengucci

Yes. Look, thanks. Yes, we are seeing some of that as well, and we're managing it accordingly. That's a key focus why we brought Chris Menoskiin, who's our new EVP of Manufacturing. And as we really scale to to combat things like that. I can tell you that those types of items are reflected in our guidance. It's really one of the factors that create the low end of our range than our high end of our range. The administration is aware of this as well, and they're making the right kinds of investments, which we fully support.

The other thing that we're pretty good at is making certain that we're eyeballing those types of shortages before they present themselves and really work designs around some of those items.

The last thing from a shareholder margin cash flow point of point of view is really getting our hands around what are those long lead high-risk items that we have to invest in, meaning do we spend some of our cash flow earlier than we would like, but it actually supports much longer-term growth. So do we spend $30 million of cash in the second quarter to end up picking up $60 million more over the entire year? The answer is going to be yes. That's why we talk about being a full year company versus a quarterly company.

Jeff, anything you want to add?

Jeffrey MacLauchlan

Yes. I would -- I'd only add, you didn't explicitly ask this, but I think it was sort of in the under -- in the tone of your question. We also have a business model where we have more pricing opportunity frequency. So the nature of much of what we sell gets repriced each time there's an order. So unlike a large 6- or 8-year platform program where the pricing is committed far in advance, we rarely are more than a year or 18 months or so from being able to price the next increment. So that's also, I think, a risk mitigator that may not be fully appreciated compared to some of the others in your question.

Operator

Your next question comes from Peter Arment with Baird.

Peter Arment

Nice results. John, you mentioned OTA kind of contract structures early on in your kind of opening comments. When you guys have some, I guess, through TLS, Manpack and maybe ARKA has a little bit, could you kind of describe kind of the exposure, I guess, risks around OTAs? We've seen some other competitors for OTAs are easy to cancel or easier to cancel? And just how you're thinking about the exposure with CACI and the use of those contract structures when you think about your business?

John Mengucci

Yes. Thank you. Yes, look, you've got to know what you're getting into when you're getting into them. And this really ties back to our invest ahead of customer need thesis that we've been on for just short of a decade. The reason why our OTAs and our CSOs are successful is because it starts months and years ahead of when that OTA is actually signed. It's really about understanding the areas that we, as a company, believe we have unique skill sets in that we've proven we have the unique skill sets in and the fact that our 1,400 people who are co-located in commands tell us that those are dire technology needs that our customer requires.

So we are now putting hundreds of millions of dollars down. We're actually putting hundreds of person years of knowledge into an OTA, where we're working with folks on the bleeding edge of the mission on the customer side and places where the customers have nothing today, a 50% or 60% solution looks awesome. So we're also not making the mistake of trying to develop the 100% pure solution under an OTA because that means that there's far more risk on us and the risk equation between us as a customer gets unbalance.

So what makes our successful more far more times than not is a willing customer, a common understanding of what the mission needs, software-based tech so that we can make really quick changes during that OTA cycle. And our window between the design development, which is the Phase 1 of the OTA and production is most likely industry-leading. That's what drove TLS Manpack. That has driven a lot of the other $0.5 billion of different OTAs that we're involved in today. So understanding the threat, understanding what the investment needs to be getting involved in low-risk areas. And then when we get to the production side, building these centers of excellence, so we don't let that customer down even though we may be building a 60% solution and then also being able to modify that solution because it's software-based.

Jeffrey MacLauchlan

You can add the commercial tools that we apply to those problems as well. So the mission familiarity is important, but our partnership with GitLab and some other commercial entities lets us react in a way that is a discriminator.

Peter Arment

Got it. I appreciate that color. And just a quick follow-up on ARKA. The space force budget is, the majority of it is in the base budget. It's only $12 billion tied up in the original $350 billion reconciliation bill. So is that giving you the confidence around that the majority of the space force budget is in base and that the booking visibility for ARKA continues to be robust? Just some additional color just given all the budget dynamics?

John Mengucci

Yes. Peter, absolutely right. And I'd also tell you that ARKA also brings about $2 billion worth of work that's over the next 3 to 5 years, whose future is in space-based payloads that are in the base budget, but they haven't been put into our backlog yet, as Jeff explained. So yes, it's comforting that it's there. It is comforting that we did the acquisition when we did it was very intentional and make certain we can get our hands on. things are in the base budget. I'd also say in the reconciliation side, if you look at Golden Dome, what ARKA delivers is extremely crucial to that mission. And we all know that the reconciliation funding is not just single year funding. In some areas, it's 4 to 5 years on the year, areas, 2 to 3 years, all of that helps support the ARKA business case.

Jeffrey MacLauchlan

I'd also add, in terms of timing, I think we we were also pretty opportunistic in terms of the time that we were able to enter the debt market. Times have looked pretty good a year later.

Operator

Your next question comes from Tobey Sommer with Truist.

Tobey Sommer

I wanted to ask you a medium- to long-term project question about your product portfolio. In 3 or 5 years of what you have currently, what do you think is going to be generating the most revenue and profit for the firm?

John Mengucci

Yes. If I had open my crystal ball up on an open investor line, I would probably say it's a good mix between what we do in the EW area and then supported by what we're doing in space. We're just so early. We're in the infancy stage of both of these markets. If you think about EW, we've got things across the entire spectrum that will help the customer drive their mission forward. The fact that they're all software-based means that we can continually make changes. So if you look at the potential margins going out, not as a future guide, but the facings are software-based we're going to the production bench much less time than others are because we're able to provide additional features like the phone you all carry in your jackets. So it has the right mix of commerciality to it, both the solutions and how we drive investments. And frankly, that's what's going to continue to drive larger and larger free cash flow as we go forward.

Operator

Your next question comes from Colin Canfield with Cantor.

Colin Canfield

Maybe if we could talk about cash flow progression. If you could talk about how you think about essentially the combined base based capability portfolio, so ARKA [indiscernible] and then space-based EW, how do you think about the investment requirements relative to the scale of opportunities? And then maybe if you could parse that out on how you kind of view the fastest-growing swim lanes between commercial EO providers of what you've won with [indiscernible], base space situational constellations like what we're seeing with true anomaly, and then participation in SpaceX's StarShield program? So those 3 particular programs and if there's a fourth line of really fast-growing prime classified work as well? Just how you think about kind of the investment requirement versus those program growth? Or that program growth?

Jeffrey MacLauchlan

So John will probably want to add to this, and he'll have some insight on some of the specific programs and places that you mentioned. But basically, Colin, I mean, the cash -- I'm going to come back to cash flow. I mean, we apply the same tools in context of your question that we do others. If we see an opportunity to invest in a way that grows free cash flow dollars, that's the decision that we make. I would also point out because we've had a little bit of noise in our free cash flow forecast over the last couple of years, I'd also call attention to a slide that we provide from time to time that sort of lays out some of the unusual items that are in free cash flow so that you can sort of do your analysis and kind of tease out what is sort of recurring free cash flow, I'll call it, versus what are some unusual cash items. And that chart is in the appendix here. But you'll see in there a nice progression in free cash flow as we make those investment decisions and trade-offs that you asked about.

John Mengucci

Yes, Colin, and I was running as frantically as I could, but on some of the different programs that you mentioned, I'll start by answering all of the above is what's going to continue to drive cash flow. But look, let's talk about [indiscernible] and what ARKA has done in that area. Look, they have found a way to put exquisite results into a smaller payload and wide adventures like us, Frankly, I mean, without bragging, we were the best solution. I went to a competitive evaluation, we had high TRL. We took the family of systems approach, a really strong design and history of supporting cutting-edge capabilities in the space. So for them, that was a value-added proposition as well as it is for us.

So there's a case where we balance investment and a lot of that investment happened before we took over ownership because we've got a group of folks in Danbury, Connecticut, who've been doing this for almost 7 decades. They understand the investments they need to make, and they are all very much free cash flow and cost cost conscious. If you look at OCTs, that's going to be another area that's going to continue to grow. We put the right investment dollars into Tranche 1. We openly shared we were going to struggle through the producibility side of that enter ARKA that understands how to build in that environment really well. So from the current CACI work into the new ARKA work, they brought some great helping hands to make sure we could get through Tranche 1 and then we've got EST terminals and everything else later.

So in both of those examples, the ones that I can talk to and talk to on this line, if we look at space-based EORs as well as OCTs, both of those are really good strong business cases. And as Jeff mentioned, as we go forward, we're going to have other areas, both in space and in EW as well as in our digital network tech area. We'll have to look at the level investments we're looking to make, but all with an absolute first eye on generating more free cash flow.

Colin Canfield

Got it. And as you think about M&A strategy, maybe if you could talk about kind of the balance of cash flow growth versus price that you're seeing out of the feedback assets versus foster-backed assets? And maybe just talk about kind of which buckets of assets are you seeing as more attractive at the moment?

Jeffrey MacLauchlan

Yes. Colin, it's hard to make a general comment about that. They -- you won't be surprised to learn that every one of those sort of has its own story, the length of the hole, the prospects, the market position. We continue to curate our pipeline pretty carefully you know that we focus on gaps. We're not buying volume or bulk. We continue to look -- there is some price valuation, I'll call it, correction or adjustment kind of in the air. We're mindful of that and watching it. Personally, I don't think it's done. But that's certainly part of how we think about and evaluate opportunities. And again, it's very hard to generalize every story -- every opportunity sort of has its own set of facts and circumstances.

Operator

Your next question comes from Gautam Khanna with Cowen.

Gautam Khanna

I was wondering if you could maybe just calibrate us on recompetes this year. Have any been extended? So if you could just talk about the exposure there. And then also, given the outstanding bids and the submissions to come, if you could characterize what you expect in terms of bookings in the December quarter, which normally is soft, but it seems like you might be able to do better than what is typical seasonality? If you could just talk about cadence of bookings through the fiscal year as well?

Jeffrey MacLauchlan

John will certainly want to add to this. But we have had a number of sole-source extensions, which sort of short circuit or delay, I'll say, they don't do away with it, but delay recompete processes. We've seen that on Beagle in a number of classified areas. We've seen areas where we've got a year or 2 kind of extensions, which is also -- although he didn't ask, it is also part of the award duration statistic that you saw because obviously, you put those in at 1 or 2 years, it lowers the average, but it's also a significant risk mitigator beyond the statistic. So those are areas where, obviously, we have satisfied customers that are in a position that they can justify an extension we're obviously always happy for that to happen.

So the recompetes, you saw a step down in this quarter. Beagle was a big part of that and a couple of other classified things, as I said. And there aren't any single large meaningful significant recompetes. There are a handful of smaller things for the balance of the year. Of that 3% remaining, recompete content is probably 6 or 8 smaller programs.

John Mengucci

Yes. And I think the other half of your question, on the -- let's see, Jeff talked about the duration of contracts put into our backlog this quarter. Hey, look, I'm always happy to take the millions of dollars I have to spend today on our recompete and add all those millions up and go after there and start bidding even more new work. So it's a real positive measure for us. On the bookings side, I think in my prepared remarks, I talked about we're very, very pleased, and we start to see some positive signs of the award announcement rate picked up, but it's also still sluggish. So what I, what Jeff, what the rest of the company focuses on is that's why you focus on your backlog and your funded backlog and why program performance is so important because when the customers have a discretionary dollar at the end of the fiscal year, and as they have done 7 of our last 8 quarters, they put additional funding to be really certain the contracts that we're delivering are funded.

So will it still be sluggish? Yes, I think it's going to still be sluggish over the next couple of quarters. But we're not winning work in the first quarter to support our financials of the second quarter. We actually win work in the first quarter to continue to grow this business over the next 7 to 8 to 9 quarters. So at the end of the day, we're winning the business at the right rate to continue to grow this business, and we've also improved in the last couple of years with sluggish awards that we continually come back to you all and our shareholders and talk about another full year of fantastic growth and great free cash flow.

Operator

Your next question comes from Seth Seifman with JPMorgan.

Unknown Analyst

This is Rocco on for Seth. Looking at the contract mix type, fixed price work has increased to the low to mid-30s as a percentage of revenue over the last few quarters. How much of that was driven by ARKA versus the overall government push towards fixed-price work? And where should we think about that percentage going in the future?

John Mengucci

Yes. Look, it's far beyond ARKA. I don't remember what the actual metric was between first or second quarter. I'm sure Jeff is going to add to this I'm just sort of focus on fixed price. And look, we're very comfortable with it. They are improving margins, where our technical risk is understood. I think I was shared last couple of quarters that we've had some good, deep discussions inside this company around if we're going to be asked to be the laws of physics, we probably won't take that fixed price. But if it's software-based, we understand what it is we're out there delivering, there's no reason why we shouldn't. We got a great track record of strong performance over time. And we're -- our customers are increasingly asking us that for the task orders under different fixed-price arrangements, whatever money we're saving them to come back to us with additional work.

So we're very disciplined in the kind of fixed price work that we take, and it absolutely has contributed to margins far beyond the book of business that ARKA brings.

Jeffrey MacLauchlan

Yes. And maybe a little more specifically, if you look at that increase from 27% to 33%, about half of those -- of that 6 points is attributable to the inclusion of ARKA. So the other half of it, you ought to think about in the latter category, John mentioned, where we just have sort of native organic increased fixed price activity.

Unknown Analyst

All right. That makes sense. And then last quarter, CACI announced the hiring of several different hardware sectors. How they kind of integrate it into the firm as a whole? And how should we think about these individuals kind of helping to drive growth in technology?

John Mengucci

Yes. So Dave, Christian, Tom, I'll start with Tom. Tom's prior CCI alumni. He's running our electronic warfare business to an outstanding job, bring a lot of great new cranes to us and things that are going to continually grow that business area. Dave has come in as our COO, done a fantastic job, really, really focused on cross-company initiatives, everything from being able to drive better, more predictable producability between engineering, design and production as well as Dave has got a lot of experience in this space realm, and he's been running different sized businesses, latest business, about $700 billion, which is only a few -- $3 billion or $4 billion sort of our company. So I like he's been able to bring. And then Chris, clearly, Chris has got all of the -- all of our focus as well as all of our support to really building out these centers of excellence.

And this is another example of investing ahead of need, okay? We know what our next few years will look like. We talked about giving you a new 3-year guide. I don't think that's going to disappoint anybody out there. But for us to be able to achieve that continued growth, we need to make certain that we put a longer-term look at how we're doing the production items within this company. So Chris is going to bring a lot of expertise there.

The fact that we are a growing company, and we're a different kind of company and one that's very well respected in a very different part of the market, that makes it easier and easier for us to find world-class talent that is more than happy to come to continue what it is we built and to push us even further. So I appreciate the question.

Operator

Our last question comes from David Strauss with Wells Fargo.

Joshua Korn

This is Josh Korn on for David. Just wanted to follow up on the organic growth outlook. You had a strong bookings quarter, almost $5 billion in awards. I guess how should we think about the way those bookings in the quarter convert to revenue this year and beyond? And then if there's any specific programs you would want to highlight driving growth now in the next couple of quarters?

Jeffrey MacLauchlan

It's really, Josh, pretty broad-based across the portfolio. I wouldn't call out any 1 specific program A couple of the bigger awards that we talked about, you'll notice our 5-year programs, and we'll see those ramp up in sort of the normal way and there'll be a little bit of contribution this year. But it's really pretty broad-based. Really, there is no part of the portfolio were happily where we're seeing any kind of contraction. I mean, the business is hitting on all cylinders.

John Mengucci

Yes. And Josh, I'd also add a little bit about the Apollo win because it really is a unique -- it's the latest example of using technology-first solutions for us to win more and more work. And as Jeff mentioned, that's going to drive a lot of the top line growth over the next couple of years before that levels off. It's a 5-year program. We're really using bleeding edge AI to analyze and create inputs in area of information warfare, something we can't dig into on this kind of a call, but just recognize it's hugely important and really, really hard. We sort of have a habit of doing hard. But it's expected to be in it's higher ramp in Q3. So back to the very first question, it's one of those drivers for us to go drive growth. And then we've got things like JTMS and other programs out there that are going to continue to make sure we're set up for another really successful year.

Operator

That concludes our Q&A session. I will now turn the conference back over to John Mengucci for any closing remarks.

John Mengucci

Well, thanks, Morgan, and thank you for your help on today's call. We'd like to thank everyone who dialed in or listen to the webcast for their participation. We know that many of you will have follow-up questions and Jeff McLaughlin, George Price and Lisa Parkinson are available after today's call. Please stay healthy. All my best to you and your families. This concludes our call. Thank you, and have a great day.

Operator

This concludes today's call. Thank you for attending. You may now disconnect and have a wonderful rest of your day.